Contractual Matters

AL East

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Only the strong survive in the American League East. The division includes baseball’s two biggest revenue-generating machines and three other clubs whose revenues and payrolls reside tens of millions of dollars down the road. Continuing our 2010 payroll forecast (we’ve covered the NL Central, the AL Central, and the NL East), let’s examine the spending habits of the Yankees, Red Sox, Rays, Blue Jays, and Orioles.

New York YankeesProjected 2010 payroll: $212,966,714 (first)2009 spending: $201,449,189 (Opening Day), $220,024,917 (year-end)Future commitments: $144 million for 2011, $107 million for 2012, $94 million for 2013, $73 million for 2014

When it comes to payroll, the Yankees play a game with which the rest of baseball is not familiar. Not constrained by luxury-tax thresholds or the limited revenues of an aging ballpark, the Steinbrenners and GM Brian Cashman exploit their financial advantage at seemingly every turn. The Yankees project to spend about $213 million on their Opening Day payroll, nearly $50 million more than their nearest competitor, the Red Sox. Though spending for 2010 remains in line with 2009 levels, Cashman did not allow the club’s 27th title stop him from making changes. When Atlanta made one-time Yankee Javy Vazquez and his $11.5-million salary available this winter, New York swooped in and worked out a trade for the right-hander, providing one more quality arm for the starting rotation. Cashman also allowed $13-million-a-year players Johnny Damon and Hideki Matsui to depart, replacing them with younger and less expensive alternatives Curtis Granderson, Randy Winn, and Nick Johnson.

The Yankees have a long-standing policy against discussing contract extension with players during the season, making it all but certain that Cashman will face expensive calls on four more free agents next winter: shortstop Derek Jeter, closer Mariano Rivera, and starters Andy Pettitte and Vazquez. Those decisions are complicated by the fact that the Yankees’ books already include nine multi-year commitments extending as far out as 2017 at a total price tag of more than a half-billion dollars.

A-Rod will earn an average of nearly $25 million a year through the end of his contract. But that’s not all. With another 180 home runs, Rodriguez becomes the game’s all-time leader and receives an additional $30 million. That would push the value of his current deal to an even $300 million and A-Rod’s career earnings to approximately $468 million.

The Yankees have $529.85 million committed in long-term deals, with 80 percent of the money tied up in Sabathia, Rodriguez, and Mark Teixeira. Though the returns for Sabathia’s first season in pinstripes were excellent, it’s not difficult to imagine his heavy workload will take its toll at some point in the next five years.

Baseball’s highest-paid first baseman will earn $22.5 million per year through his age-36 season. With a healthy left wrist and Rodriguez hitting behind him, the winner of the Gold Glove and Silver Slugger is a solid bet to hold his value throughout the length of his contract.

One of the trio of starting pitchers who carried the Yankees through the postseason, Burnett is locked up through age 36. With a checkered injury history and a salary of $16.5 million per year, he’s a risk.

Posada has one year left on the four-year, $52.4-million contract deal he signed after the Yankees fell to Sabathia’ Indians in the 2007 division series. Slow on a good day, his lack of speed and eroding defensive skills leave his remaining value almost exclusively in his bat.

The backloaded end of Cano’s 2008 extension kicks in this season, guaranteeing him $19 million over the next two seasons. The Yankees hold 2012-13 club options at $14 million and $15 million, respectively.

Traded twice since signing a five-year, $26.75-million extension with Oakland in May of 2007, Swisher has found a home as Bobby Abreu’s replacement as New York’s right fielder. Swisher's $10.25-million club option for 2012 includes a $1-million buyout.

The heir to DiMaggio, Mantle, Murcer, Williams, and Gardner/Cabrera as the Yankees' center fielder, Granderson is signed through age 31. New York holds a $13-million club option for 2013, with a buyout of $2 million.

The financial arms race between the Red Sox and Yankees continues, with Boston projected to open the season with the game’s second-highest payroll at $164 million, a club record. The Sox trailed the Yankees by about $80 million in payroll in 2009, but the gap has narrowed to $48 million for 2010. GM Theo Epstein upgraded his starting pitching and defense this offseason, committing about $120 million to sign right-hander John Lackey, center fielder Mike Cameron, shortstop Marco Scutaro, and third baseman Adrian Beltre.

Like the Yankees, the Red Sox will face a series of high-profile choices next winter. Four key players can become free agents: designated hitter David Ortiz ($12.5 million in 2010, with a $12.5-million club option for 2011), ace right-hander Josh Beckett ($12.1 million in 2010), third baseman Mike Lowell ($12 million in 2010), and catcher Victor Martinez ($7.7 million in 2010). CloserJonathan Papelbon will earn $9.35 million this season, with one more year of arbitration before he’s eligible for free agency after the 2012 season. Epstein already has signed 10 players to multi-year deals worth $192 million for 2011 and beyond.

John Lackey, RHPAge: 312010 salary: $18 million, plus $3.5 million signing bonusFuture commitment: $61 million for 2011-14, with an option for 2015

The Red Sox signed Lackey to the most lucrative contract for a pitcher on the free-agent market this past offseason. His deal includes a unique provision, giving the Red Sox a club option for 2015 at the major-league minimum salary should the right-hander miss significant time due to surgery for a pre-existing elbow injury during the first five years of the deal.

Two years remain on the five-year, $70 million contract Drew signed after leaving the Dodgers in December of 2006. Drew is still productive when healthy, but if the recent free-agent market is any indication, the demand for aging, injury-prone corner outfielders does not figure to be strong in 2012.

Youkilis signed a four-year, $41.25-million extension before the 2009 season, allowing Boston to buy out his final two years of arbitration and his first two years of free agency. The Red Sox hold a $14-million club option for 2013.

After Beltre battled injuries in 2009, Seattle allowed him to leave as a free agent over the winter. Boston signed the third baseman to a one-year deal guaranteeing him $10 million. Beltre will earn $9 million this season and holds a $5-million player option for 2011 wiht a $1-million buyout.

The Red Sox hope for improved health from their $52-million Japanese import in 2010. With $28 million left on his deal, Matsuzaka will have every opportunity to re-establish himself as an important part of Boston’s starting rotation.

Scutaro parlayed regular playing time in Toronto into the first eight-figure contract of his career, signing a two-year deal worth $12 million. He should provide some stability at shortstop for the Sox, who hold a $6-million club option for 2012. If Boston declines, Scutaro holds a $3-million player option, with a $1.5-million buyout.

The club-friendly extension signed by Lester a year ago bought out one year of free agency with a club option for a second. Already a bargain, Lester’s value only figures to improve as he reaches his prime years.

Boston signed Pedroia to a $40.5-million extension after his MVP season of 2008. The deal provides the Red Sox with one of the better values in baseball and, with a relatively affordable $11-million club option, likely making the second baseman a fixture at Fenway Park through his age-31 season.

The Red Sox chose not to exercise a recurring $4-million option on Wakefield, who battled a herniated disc before electing to have back surgery in October. Boston instead re-signed the knuckleballer to a two-year deal worth $5 million, and his strong performance this spring gives the club reason for optimism.

Two of Tampa Bay’s stars are poised to become free agents, and as many as nine players, including several key contributors, will qualify for arbitration next winter. The team’s plans for a new ballpark are in limbo, and ownership has warned fans that the club’s current payroll level cannot be sustained. And the Rays still have to face the Yankees and Red Sox 19 times apiece each season.

But the forecast is not all cloudy. The face of the franchise, Evan Longoria, is signed to a contract that could turn out to be the game’s best bargain. The six-year deal, signed within a week of Longoria’s 2008 promotion to the majors, guarantee the third baseman $17.5 million through 2013, with club options and performance bonuses which could increase the total to $47.5 million over nine seasons. The options would allow the Rays to buy out Longoria’s first two years of free agency at $11 million for 2015 and as much as $14 million for 2016, prices that look downright affordable at this point in his career.

Tampa Bay faces more immediate decisions with left fielder Carl Crawford and first baseman Carlos Pena, who will be free agents after the 2010 season. Though the Rays have payroll flexibility going forward, they are not likely to be able to afford either player beyond this season. That leaves GM Andrew Friedman in the difficult position of deciding whether to hold—in the hopes for another post-season run—or sell by entertaining trade offers for Crawford and Pena.

The Blue Jays’ volatile offseason ended with homegrown ace Roy Halladay in Philadelphia and Toronto’s new general manager, Alex Anthopoulos, dealing with a limited budget. The Jays’ 2010 payroll projects to be nearly $77 million, which ranks 18th in the majors. But Anthopoulos sent $6 million with Halladay to Philadelphia, and another $10 million will go to B.J. Ryan, whose ill-fated five-year, $47-million contract finally winds down this season. That leaves $61 million for the players on the roster, a total which would rank 26th in baseball.

The Jays have only one player signed beyond 2011. Unfortunately, that player is Vernon Wells, who has five years and $107 million remaining on a $126-million extension signed in December 2006. With an $8.5 million payment March 1, Toronto only just recently finished paying off Wells’ signing bonus. Now all that remain are salaries of $12.5 million this season, $23 million in 2011, and $21 million annually for 2012-14.

Middle infielders Aaron Hill and John McDonald are signed to affordable deals through 2011. However, the Jays have no other long-term commitments, although they could face as many as 14 arbitration cases for 2011.

Orioles president Andy MacPhail invested in pitching this winter. In early December, he acquired right-hander Kevin Millwood and $3 million in a trade from Texas, taking on $9 million in payroll to add a veteran presence to his starting rotation. Less than two weeks later, MacPhail landed a closer, signing free-agent reliever Mike Gonzalez to a two-year, $12-million deal. Baltimore’s Opening Day payroll will be about $72 million, which should rank between 20th and 23rd in baseball.

The Orioles have substantial money committed to just three players beyond 2010: Gonzalez, second baseman Brian Roberts, and right fielder Nick Markakis. Roberts will earn $10 million in each of the next four seasons, while Markakis is due $61 million over the next five years.

Baltimore faces as many as eight arbitration cases for 2011, including center fielder Adam Jones, whose contract was renewed for $465,000 on Tuesday. Jones narrowly missed qualifying for arbitration this offseason when he lost a tiebreaker for the final Super Two arbitration spot.

Yet another reminder that Vernon Wells will be remembered far more for a contract than for any performance on the field - although with floating realignment, who knows how many teams will play in the AL East.

Beltre can exercise his 2011 option for $5 million (or up to $10 million, depending on his 2010 performance). Or he can choose to decline his option, take the $1 million buyout from Boston and file for free agency for 2011.

Wells actual 2012-14 salaries are $21 million. The $24.6 million figure represents his salary plus a pro-rated share of his signing bonus. Sorry for the confusion. He is Toronto's only player signed beyond 2011.

The tiebreaker is service time in the immediately preceding season. Both Jones and Cincinnati's Micah Owings lost out to Mike Fontenot of the Cubs. Each players had 2 years, 139 days of career service time, but only one spot was available.

About the 'Super 2' designation. As I understand it, the Super 2 players are the top X%(15%? 17%?) of 2nd year players with less than 3 years of time. With more and more teams waiting to bring up players in attempt to gain another year of service time at cut rate pricing it would seem to me the amount of time required to reach Super 2 status should actually end up being reduced as the years go by. If nearly everyone is waiting a month or two to bring these kids up, then shouldn't at some point these still the be longest tenured 2nd year players?

Given the economics, if a finite market comprised exclusively of superstars existed, it would eventually yield the suggested result. It seems likely, however, that a higher proportion of players with a lower projected ceiling, (or lower priced role) would in fact comprise the group of potential super-2 individuals who eventually qualify. The data must be out there - I wonder if more middle relievers, 4th OFs, utility IFs, back of the rotation guys earn the Super-2 status over time.